JLN Options: Options Traders See Higher Volatility Ahead

Jan 5, 2012

Lead Stories

Options Traders See Higher Volatility Ahead
By STEVEN M. SEARS, Barrons.com
Savvy options traders are taking advantage of the subdued VIX to buy low-cost protection
On Thursday, the stock market sent investors a critical message. If you failed to hear it, you missed information that matters more than the mostly rosy prognostications for the stock market in 2012 from Wall Street banks. The message: Volatile volatility is back from winter vacation, and likely here to stay for all of 2012.
http://jlne.ws/AqS5Y1

Deutsche Börse Holders See NYSE Deal Chances Fade
By ULRIKA DAUER And JACOB BUNGE, WSJ.com
With the European Union’s antitrust verdict just a month away, several of Deutsche Börse AG’s biggest shareholders are losing confidence in the German exchange operator’s ability to pull off its planned tie-up with NYSE Euronext. As talks with the EU’s antitrust authorities continue to drag on, investment managers at several of Deutsche Börse’s 10 largest shareholders and a spokesman for the German DSW retail shareholder association said there is now only a 40% chance of the deal getting EU clearance by Feb. 9—a key hurdle until the offer terminates on March 31—compared with over 50% during the summer.  http://jlne.ws/wVSgjz

Tullett Prebon appoints head of options trading on base metals desk
Banking Business Review
Published 05 January 2012
UK-based inter-dealer broker Tullett Prebon has appointed Simon Underhill as head of options trading (EMEA) on the base metals desk. The company said that the appointment is part of its long-term strategy to enhance its product offering to clients and grow its base metals team.  Based in London, Underhill will report to joint desk managers Mark Sedgwick and Steve Walter.
http://jlne.ws/zf9A0A

Exchanges

SEC Blesses CBOE Stock Exchange’s Deal For National Stock Exchange
By Jacob Bunge, Of DOW JONES NEWSWIRES
The Securities and Exchange Commission has approved the planned takeover of the National Stock Exchange Inc. by the CBOE Stock Exchange LLC, which is partly owned by the Chicago Board Options Exchange.  Regulators’ approval gives a green light for the union of two of the smallest U.S. stock-trading platforms, which together represent about 0.6% of daily turnover in domestic securities, according to data from BATS Global Markets.  The all-electronic CBOE Stock Exchange, or CBSX, had agreed in late September to buy the NSX, another automated market once known as the Cincinnati Stock Exchange. Their deal was patterned on the structure of larger rivals like Nasdaq OMX Group Inc. (NDAQ) and NYSE Euronext (NYX), both of which run multiple stock exchanges offering various market models and pricing schemes in a bid to lure different types of trading.
http://jlne.ws/ADlsA8

Eurozone crisis, MF Global chill trading at CME Group

chicagotribune.com/Reuters
CME Group and IntercontinentalExchange said on Wednesday that trading volume dropped last month, which analysts attributed to MF Global’s collapse and Europe’s debt crisis chilling trading in U.S. futures markets. Chicago-based CME, the biggest U.S. futures exchange operator, said trading dropped 9 percent last month to an average of 9.6 million contracts a day, taking the shine off a record-setting year.
http://jlne.ws/wgD0Xl

CME Retains Futures-Trading Crown For 2011
WSJ.com
–CME Group remains world’s largest futures market by contract volume
–Economic turmoil also boosted futures trading at Deutsche Boerse, NYSE Euronext
–Strong year overshadows slower-than-usual December activity
By Jacob Bunge and Mia Lamar Of DOW JONES NEWSWIRES
CME Group Inc. (CME) maintained its standing as the world’s largest futures market in 2011, outpacing the prospect of an enlarged competitor in the planned merger of Deutsche Boerse AG (DB1.XE, DBOEF) and NYSE Euronext (NYX). Chicago-based CME reported Wednesday a 10% rise in trading activity over 2010 levels, outstripping growth at the European futures markets run by its smaller rivals as global economic turmoil drove derivatives-trading activity to record levels.
http://jlne.ws/yixPBM
NSE BSE to conduct special F&O trading session on Saturday
Moneylife Personal Finance site and magazine
January 05, 2012
On account of upgradation in the Futures and Options (F&O) trading system, the NSE is conducting a special live trading session on Saturday. To maintain uniformity in trading time-table, the BSE will also conduct a special live trading session in the equity F&O segment on that day
http://jlne.ws/wxzyI0

Regulation

Chicago Tribune: STOCK Act is Merely ‘Window Dressing’ and ‘Damage Control’ to Protect Rep. Bachus and Others
Big Government
The Chicago Tribune editorial page believes that legislative efforts to ban congressional insider trading, such as the STOCK (Stop Trading On Congressional Knowledge) Act, are simply an exercise in “damage control” and “window dressing” to shield Rep. Spencer Bachus (R-AL) and others mentioned in a 60 Minutes investigative report, based on Breibart News editor Peter Schweizer’s bestselling book, Throw Them All Out.
…A Breitbart News exclusive report revealed that Rep. Spencer Bachus’s options trading records during the summer and fall of 2008’s debates over the Troubled Asset Relief Program (TARP) were curiously well-timed with market trends. Specifically, from July to November 2008, Rep. Bachus executed at least 40 options trades that resulted in as much as $50,000 in capital gains.
http://jlne.ws/yYeqh3

Strategy

CBOE Global Volatility Feature for Options Profits
TheStreet
By Jill Malandrino 01/05/12
This complimentary article from Options Profits was originally published on January 3 at 8:59am EST.
Russell Rhoads is an instructor with The Options Institute at the Chicago Board Options Exchange. He is a financial author and editor having contributed to multiple magazines and edited several books for Wiley publishing. In 2008 he wrote Candlestick Charting For Dummies and is the author of Option Spread Trading: A Comprehensive Guide to Strategies and Tactics. Russell also wrote Trading VIX Derivatives: Trading and Hedging Strategies using VIX Futures, Options and Exchange-Traded Notes. In addition to his duties for the CBOE, he instructs a graduate level options course at the University of Illinois – Chicago and acts as an instructor for the Options Industry Council. Volatility as an asset class continues to gain acceptance among money managers and the trading of volatility continues to grow.
http://jlne.ws/AqpNkV

Inverse VIX ETN (XIV) Gets Hot Again
by Michael Johnston, ETF Database, January 5, 2012
Between the beginning of the second half of 2011 and the middle of December, few exchange-traded products endured a tougher stretch than the VelocityShares Daily Inverse VIX Short Term ETN (XIV); the exchange-traded note plummeted last summer as the “fear index” spiked and VIX futures markets entered a rare stage of backwardation. Those two elements–increases in
the spot VIX coupled with market expectations of an upcoming decline–spelled trouble for a product designed to deliver daily inverse exposure to a benchmark comprised of short-term VIX futures contracts
http://jlne.ws/AnOMvy

Events

NYSE Euronext Announces Date For Fourth Quarter And Full-Year 2011 Earnings Release And Conference Call
Press Release
NYSE Euronext ( NYX) will announce earnings for the fourth quarter and full-year 2011 before the market opens on Friday, February 10, 2012. A news release will be issued at approximately 2:30 a.m. (New York) / 8:30 a.m. (Paris) and a conference call with remarks by NYSE Euronext senior management will begin at 8:00 a.m. (New York)/ 2:00 p.m. (Paris). A presentation will be referenced during the call and available on our website at http://www.nyseeuronext.com/ir.
http://jlne.ws/An4P3f

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